Spacely Sprockets, Inc. invested $5,001,000 for new manufacturing equipment for its plant in Jetson, NY. The equipment was anticipated to have a useful life of 8 years, or 29,500 machine hours and a residual value of $504,000. In its first year in operation the equipment was used for 2,400 hours and an additional 2,930 hours in its second year of usage. The Income Statement for years 1 and 2 of Spacely Sprockets, Inc. are shown below. All items rounded to nearest whole dollar. Year 1 Year 2 $34,660,000 $36,245,000 $23,305,000 $22.757,000 $11,355,000 $13,488,000 Spacely Sprockets, Inc. Net Sales COGS Gross Profit Operating Expenses (before adding in Depreciation) Income from Operations Income Tax Expense (at 30%) Net Income $7,689,000 $8.150,000 $3,666,000 $5,338,000 $1,099,800 $1,601,400 $2,566,200 $3,736,600 Round all items to the nearest whole dollar and use rounded values for all future calculations. 1. Calculate the depreciation expense for year 1 and 2 using the Units of Production method. (Cost - Residual Value) / Number of Units - Depreciation per unit Year Depreciation per unit X Number of hours used = Total Depreciation Year 1 X Year 2 X 2. Recalculate the Income Statement for Year 1 and Year 2 including the Depreciation Expense as part of the Operating Expenses. Year 1 Year 2 Spacely Sprockets, Inc. Net Sales COGS Gross Profit Operating Expenses (before adding in Depreciation) Income from Operations Income Tax Expense (at 30%) Net Income